The news that JP Morgan has announced that it will acquire the Lehman Brothers offices in Canary Wharf as it's new European Headquarters will be good news for both Vince Cable and George Osborne as it demonstrates that, despite the draconian regulations and restrictions on bonus payments, bankers are not fleeing London.
Mike Geoghan, out-going HSBC Chief Executive, may talk about HSBC's review every three years of the location of its Head Office (next coming up in early 2011), but just how realistic is it that HSBC might up sticks and relocate back to Hong Kong?
When HSBC was last headquartered there Hong Kong was a very different place. It was still under British control and very much managed as a British outpost. HSBC was also significantly smaller and less international. If HSBC were now to relocate back to Hong Kong, the reality would be that it wouldn't be regulated by Hong Kong, but rather Beijing and that is not something that either the shareholders or the employees would want.
It's not even clear that the Hong Kong regulator would even want HSBC if they wanted to come. To regulate a bank of the size and complexity of HSBC would require a far larger and more sophisiticated regulator than exists today, requiring the hiring of regulators from across the globe, in the short term at least and a very significant investment on the part of Hong Kong.
So the reality is that as the top executives of the banks sit down today with George Osborne and Vince Cable to discuss bank bonuses, for all the bluster and implied threats of moving their headquarters out of the UK, the politicians will be confident that HSBC, Barclays and Standard Chartered are all here to stay, at least for the time being.